Try to argue and you’re faced with their raised eyebrow aloofness – Take it or leave it.[break]
So you wonder, Why is that price there in the first place?
Let’s see it through from the basics. By definition, Maximum Retail Price (MRP) is the uppermost limit on the price of a good set by the manufacturer or distributor.
It is the highest amount that retailers or end sellers can charge consumers for a product. The amount includes the cost of production, transportation, taxes, and commissions, along with certain profit margin for the producer, the end sellers and the in-between traders such as stockists, distributors and wholesalers.
Besides, the state also determines a fixed rate for certain basic necessities such as rice, wheat, pulses, milk, meat, eggs, vegetables, medicines, fuel, cement, iron rods among others.
The whole purpose of stating the MRP, then, is to protect consumers from being cheated by retailers who try and sell products in unreasonably high prices at every chance they get.
“A retailer cannot charge consumers above the MRP. In an open competitive market, the competition in offering good price deals has to be below the MRP and not above. But that’s not the practice here,” says advocate and consumer right activist Jagannath Mishra.
Here, what happens is that many retailers will tweak up the prices to their maximum profit without being the least bothered about prohibiting laws and crossing the MRP limit.
Mishra points out that retailers often cite reasons of having to bear transportation costs, road taxes and other such extra charges for marking prices above MRP.
“MRP actually should be fixed taking in account all of these extra charges and taxes. So, in theory, a product should cost the same in Kathmandu and Bajura. But you just need to get to Lamatar, which is not even that far from Kathmandu, and you’ll be charged extra.”
Moreover, even within the city, the prices of the same commodity vary from store to store; many of them claiming higher than the fixed MRP.
According to Mishra, the Consumer Protection Act, 1997, states that if a retailer is found tampering with the price of a good, he/she can be slapped a fine up to Rs 200,000 and/or a three-year sentence.
The Black Marketing Act, 1975, also limits the profit margin of upto 20 percent on products, and any person found violating the market norms is punishable by up to five years of imprisonment and certain amount of fine.
To assure that retailers follow the MRP practice, the Act requires every retailer to either have a clear display of price list of goods available in the store or have the MRP stated clearly in the packing of each product.
Despite the legal provisions to ensure that consumers are not overcharged, lack of proper implementation and monitoring of the MRP practice still places the consumers at a vulnerable place.
“Checking on MRP and the display of price list hasn’t come into priority,” says Shankar Prasad Poudel, director at Department of Commerce (DoC), the major market monitoring agency in Nepal.
The Department which sends out a daily inspection team for market monitoring has been focusing more on checking severe impacts such as manipulation of market prices through artificial scarcity, hoarding, fixing quotas for customers, open black marketing, as well as license issuance and renewal, standard weight certification and quality monitoring.
As the sellers remain unchecked on their retail prices, more than 80 percent of the stores still do not display their price list, thus enabling to manipulate the prices as per their whim.
Poudel adds that beside the government fixed rates for specific products, manufacturers of the few domestic products we have in Nepal also should monitor their retail prices in the market by making sure their customers are well informed of the fixed MRP.
“If a company hasn’t mentioned the price and other important details, then the Department can order the manufacturers to do so within a certain time,” Poudel says and adds, “It can also take action against the retailers and sellers if any complaint report has been filed by consumers being charged extra than the price mentioned or accepted in the market.”
Moreover, the irregularity and exploitation is more in imported products which occupy the greater fraction of total consumer goods in the nations market.
“Though all manufacturers have to declare MRPs, some don’t and that includes international manufacturers as well,” says Laxman Aryal, deputy director general at Department of Customs. “Under the initiation of the Department, the government since last year has made it mandatory to declare the MRP for certain goods starting with automobiles, drinks as well as additional 11 items, including television, refrigerators, energy drinks and digital cameras.”
On one hand, Aryal says it protects revenue by checking on cases of dealers trying to under-invoice imported goods at the customs point only to evade paying appropriate taxes and later selling it at huge profit margin.
By stating MRP, it also brings the imported products at fair transaction value when it enters the market, thus ensuring that the consumers are well informed and can bargain for competitive prices.
Currently, 20 percent of the imported goods require MRP which has improved the market scenario to a certain extent. However, the chance of traders manipulating prices in Nepal still remains high.
“Whereas the market competition and the government policies are two factors that regulate the market prices, the third monitoring factor is customers themselves,” says Aryal. “The consumer on their part also has to be well informed and should analyze the available information, such as the prices of products, to create a fair market practice.”
The findings of a 2011 Sample Consumer Survey carried out by DoC in the capital also support that consumer awareness is essential for a healthy market.
It suggests that the majority, i.e., 45 percent think lack of consumer alertness is the main reason for a consumer being cheated while 40 percent said it was due to dishonest activities of the sellers.
The survey also showed that 59 percent checked the packing, label, MRP, expiration date and such records before buying a product. But 32 percent didn’t bother to do so and the rest 9 percent had no idea regarding such information, making it easier for the sellers to deceive them.
Poudel informs consumer awareness campaigns have been marked as one of the priority areas in the Strategic Plan of Department of Commerce (2011-2013).
Besides regular awareness programs in different parts of the country, he says they will also be distributing booklets and advertising through posters, hoarding boards, print and electronic media.
Besides the primitive advertising tools like posters and jingles on radio and TV, Poudel says, they realize a need to create a platform for citizens to discuss and better understand every aspect of consumer right.
With the release of market monitoring directive by National Human Rights Commission –Nepal (NHRC) last September, consumer rights has also been endorsed as human rights.
“Profiteering which includes charging more than MRP price is undoubtedly against consumer rights,” says commission officer Bed Bhattarai. “In Nepal, a consumer has to look around for competitive prices of the same product, so the basic right to choice is a far cry.”
There’s also the consumer’s right to be heard and provided a compensation, which the governmental mechanisms like DoC, Department of Food and Technology, and District Administration offices haven’t been able to deal with effectively.
He further stresses that manufacturers and sellers also have to be aware of market norms and regulations.
For retailers like Surendra Shreshta, 40, charging the MRP rate for domestic product and competing on bulk sales price is the norm.
“For imported products, most of which are Indian, you have to charge a bit extra after you convert the MRP into Nepali currency to maintain a certain profit margin,” says Shrestha.
“Besides, if retailers claim extra amount than the normal market price in imported as well as domestic product in the name of transport, rent and everything, that should not be the case as you are supposed to bear all that from your profit.”
Regarding market irregularities within and outside the city, he says, while some do it with a motive of profiteering, some are actually forced to overprice as the distributors often could be manipulating the prices in between.
Mishra argues Nepal is still to form a Price Regulation Policy that can help monitor market prices and check on the irregularities through price fixation, storage and price list management.
“In many legal cases against profiteering, we’re still debating over the maximum profit margin of 20 percent. Whereas the profit margin has to be in the overall cost, the traders use that for every transaction from manufacturer to stockist, wholesaler, then retailers, which makes the end price too high,” says Mishra, “Hence, it is important to develop a clearer policy that sets a balance of price for every party involved.”
Though the proposal to form such a policy was drafted last October, DoC is only recently waking up to its importance, following the unnatural price hike, and stated that it would be carried out within this fiscal year.
In the current situation, with the skyrocketing inflation rate, the sluggish pace of policy formation and uncertain implementation, you would not want to wait around.
You would not want to keep paying more than what is rightfully declared. It’s no more a matter of just being an aware consumer but also a responsible one.
Keeping yourself well informed and not speaking out or reporting against deceptive practices isn’t viable if you decide on not being cheated.
The telecom service provider, by the way, has been running a campaign so that retailers don’t charge extra to their valuable clients anymore.
So the next time you need to buy one, you can claim the MRP price. After all, it is there for a reason. And let that be a start.
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